Budding consumers need guidance, but how do parents balance lessons in financial responsibility with the realities of peer pressure and hard-sell advertising?

At 8 years old, Gian Luca Rossi is already a conscientious spender, prioritizing with purchases like his Gogo figurine collection.

Photograph by: Allen McInnis
, The Gazette

Tweens. They’re too young to work, but old enough to spend.

They know about all the latest toys (Gogo’s Crazy Bones Series 2 Collection!) and hand-held games (Nintendo DS Transformers: Dark of the Moon Autobots!).

And their next thought is usually: ’I want it, need it, have to have it.’ This is a problem when one pack of Gogo trading figurines can cost a week’s allowance and the game you want for Nintendo DS costs almost four weeks’ allowance, and you’re still years away from your first job interview and paycheque.

The cost of being a tween has never been higher as kids develop a taste for high-tech toys from a young age. Children learn consumer behaviour from watching their parents, but keeping things simple — a deck of cards or a skipping rope — is a hard sell in today’s wired world of computer games, iPods and cellphones, not to mention peer pressure and advertising. Consequently, tweens — roughly defined as 8-to 12-year-olds — turn to the only bankers they know: mom and dad.

And that’s when the heavy lifting kicks in: How much money should a tween be given?

Teaching children the value of money is an ongoing process that some experts say should start when kids are as young as 3. By the time they reach the tween years, they are old enough to understand the basics of a financial plan.

Children learn much of their spending and consumer habits from their parents — something grown-ups might want to remember before introducing financial rules and regulations they can’t stick to themselves.

Is allowance the way to go? Should tweens be paid for chores? How much allowance is too much, or too little?

Depends on who you talk to. Some parents don’t dole out any allowance and hold the stance that a child should earn every penny. Others hand over the entire government child allowance cheque for carte-blanche spending.

In her book Money Doesn’t Grow on Trees (Simon & Schuster), financial expert Neale S. Godfrey writes that children are born with financial personalities: They lean naturally toward being either a spender or a saver. Striking a balance between the two extremes is a parent’s delicate goal.

Godfrey is a firm believer in starting allowances for children as young as 3. "Rather than handing a youngster a sizable sum of money, or doling it out a dollar at a time, a weekly allowance gives the child a source of income that he or she can learn to make decisions about," she writes.

But how much allowance strikes the necessary balance?

Godfrey warns: "Be prepared. The 50 cents a week that you got as a child won’t enable your offspring to learn much about finance today!"

She suggests the allowance reflect the child’s age — $1 for every year. And so an 8-year-old would make $8 a week.

And then she suggests dividing the allowance into four jars: one for quick cash, which can be spent as the child wishes; one for medium-term savings (for something that will cost more than a couple of weeks’ worth of allowance); one for long-term savings (for higher education); and one for charity (more on this later).

Ken Ringel, a senior investment adviser for Assante Wealth Management in St. Laurent, remembers cutting lawns, delivering newspapers and, at 13 years old, refereeing hockey games to make money.

"I was always a saver," Ringel said. "If I had $10, I put it in my piggy bank and didn’t touch it."

Ringel is step-grandfather to 8-year-old Gian Luca Rossi. Ringel is doing his part to pass on financial wisdom to Luca.

"I bought Luca a clear-glass piggy bank and told him if he got money as a gift, he should put it in the ’bank’ — invest it, so to speak," said Ringel. "But I also give him birthday money he can spend right away. There should be room in money management to have fun when you’re a kid.

"On his eighth birthday, I gave him $50, took him to a toy store, and told him he was free to buy what he wanted.

"It was amazing to see how quickly he began to prioritize. It went from frivolous to conscientious purchasing."

Instead of buying a lot of small, cheap items, Luca wandered the store studying price tags and ended up spending all his money on one item: a remote-controlled helicopter. "If he had bought 10 cheap items, I wouldn’t have said anything," Ringel said. "It’s better to make (financial) mistakes when you’re a kid. That’s how you learn."

He spends his allowance on Pokemon trading cards (yes, they’re back in again) and Gogo trading figurines. Each pack of cards or figurines costs about a week’s allowance.

Gullotti and Rossi began giving Luca allowance when he was 6. He had expressed interest in buying things during weekend shopping outings with his parents. They talked to him about doing chores for a weekly allowance, and he liked the idea of earning the money he wanted to spend. To earn his allowance, he keeps his room clean and helps look after the family dog.

"Luca is better at saving than me," Gullotti said from their home in Ile Perrot, Que. "He puts his money in the piggy bank, and because it’s clear glass he sees it accumulate."

So much for spending and saving. What about donating?

Godfrey suggests 10 per cent of an allowance go to the donation jar.

She writes: "Talking about different charities, and helping your child decide which one he wants to support, is a wonderful way of learning more about your child’s interests."

Donations don’t have to be about only money. Donating time to a charity is also a way for children to learn about being a good citizen of the world.

"We have one foster child," Gullotti said. "Luca is aware that (his mom and dad) work full time to help (Luca and his two siblings) and the foster child.

"After the earthquake in Haiti, Luca asked if we could get another foster child and said we should take the money we needed from his allowance. We (the parents) ended up donating, monthly, to the Red Cross instead. We’re paying for it, but the fact that he would even offer shows that he is aware."

At eight years old, Luca is an entry-level tween, and already embracing the consumer chatter in the schoolyard.

"Yes, he is influenced by his peers," Gullotti said. "When he comes home (asking for the latest gadget) we tell him to put it on his birthday or Christmas list and we’ll see what we can do."

Luca is rational beyond his years and patiently puts the name of the big-ticket item on his wish list. Not that he’s without gizmos.

Luca likes to play electronic games. He got his first Nintendo DS from his dad when he was 6 years old. He just received one of the latest versions of the Nintendo DS series, called the Nintendo 3DS, as a first-communion gift from his family.

Games for the Nintendo DS cost around $30 and games for the 3-D version run around $40.

"He saves for the games," Gullotti said, adding that Luca occasionally dips into his savings piggy bank to top up the amount he needs to buy a game.

"I think allowance is very important," Gullotti said. "It helps children learn about the concept of what things cost."

Gullotti said the Internet is still not a part of Luca’s life and he won’t be getting a cellphone until he is in high school.

"He’s allowed to (play games) one hour a day. Without the rule, things get out of control. Personally, I’d rather he collect 100 Gogo figurines than play on that thing."

Dad is more of a fan of the games than mom, so the negotiations about time spent on the device are ongoing.

At the other end of the tween spectrum, 12-year-old Mariah Noel doesn’t get a conventional allowance. Instead, mom Deborah Blais pays her $1 a chore from a pre-set list of chores.

"I wanted to find a way to get her out of her room and doing things," Blais said from her home in Montreal. "How much she earns depends on how much effort she puts into the chores. Her earnings can range from $10 to $15 a week."

Mariah spends most of her earnings on manga, a type of Japanese comic book. Each book costs around $15.

Chores range from emptying and loading the dishwasher to washing the bathtub to taking out the garbage and recycling.

She is not paid for keeping her room or her work station clean.

Mariah was given a cellphone in Grade 6, when she began going to and from school on her own. It doesn’t have a texting plan. She does have a Facebook page, much to her mother’s dismay. But that’s the extent of her interest in technology.

"I’m very anti-Facebook," Blais said. "I think it gives children more opportunities to be callous, less empathetic. They call it a social network, but I don’t find it very productive socially. Anyway, Mariah rarely visits her Facebook page."

If Mariah hankers for a good video game, she need only head for the home office, where she can find pretty much anything a gamer could desire. Blais’s boyfriend, Edgar Parente, is a programmer in the gaming business. He has almost every gaming system imaginable. Blais said her daughter enjoys playing now and then, but is more interested in reading.

To help motivate Mariah to save, Blais opened a savings account at a bank that tops up the first $100 deposited with an additional $25. Last year, Mariah received $60 from family and friends for her birthday. She put it away in savings.

"She knows I stick to a strict budget. I have one set up for the entire year," Blais said. "I’m a firm believer in not living off credit. If you don’t have the money, save.

"I grew up in a poor family. My mom raised us on her own. By the time she was 28, she had five kids and little education."

Blais acknowledges that growing up poor affected the way she spends money on her daughter.

"I do spoil her," Blais said. "Every year she gets to choose a city to visit that can be reached by train or car. And she gets to bring a friend along. On top of that, we take one exotic vacation a year.

"That said, I don’t buy beautiful clothes for myself and I’m careful wherever I can be. It’s all about the spreadsheet."

kgreenaway@montrealgazette.com

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Should allowance be a reward, or a parental responsibility?

Should allowance be attached to household chores and good behaviour?

"Yes, yes, yes!" says Neale S. Godfrey, author, columnist and founder of the Children’s Financial Network, a company dedicated to educating children worldwide about finances.

"In addition to using an allowance to teach money management, this weekly sum will also show your child the relationship between work (chores) and money (allowance)," Godfrey says in her book Money Doesn’t Grow on Trees (Simon & Schuster).

Godfrey divides household chores into two categories — "citizen of the household" chores and "work for pay" chores — but writes that there are no "hard, fast rules" about which chores fall into which category. She does, however, stress that there are certain things that should never be paid for: brushing teeth, getting good grades or going to bed on time.

Alyson Schafer is a parenting expert and author. She contributes to the Bank of Montreal’s SmartSteps for Parents online pages, in which experts offer advice on how to help your child become smart about managing finances.

Schafer writes: "No! Kids should do chores because they need to be done. When you live in a community, it’s expected that everyone helps out to the best of his/her ability.

"Children should get an allowance because it’s a requirement of living that parents are responsible to provide, no different from food, shelter and clothing. It’s a life responsibility parents need to teach, like learning to clean or cook. So don’t pay your kids for making their beds; thank them for helping the household function well instead!"

Alison Griffiths is a financial expert, journalist and television host. She also contributes to SmartSteps.

"An allowance can work very well if there are chores that the kids do weekly, after which they are given their money," she writes.

"However, at this stage (tween age), kids need immediacy. So, rather than offering a weekly allowance in exchange for daily chores (such as putting away the dishes), make it a weekly chore that’s directly tied to the giving of the allowance. And it could be something fun, like gathering up the recycling or raking leaves.

Ultimately, it’s not the "earning" of the money that’s important. It’s getting the kids to see the allowance as an "event" to anticipate with joy and excitement.

For those interested in starting financial education early, the Sesame Street character Elmo stars in a series of short videos about learning money skills. You can see them at sesamestreet.org.

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Supervising kids in the digital playground

It’s becoming common for parents to supply their children with a cellphone when they begin travelling to and from school alone. Suddenly kids can text, and if they’ve got a smart phone, they can surf the Internet, connecting them to Facebook and other social networking sites.

In 2010, eight out of 10 Canadian households had access to the Internet, and 54 per cent of those households used more than one device to access it, according to Statistics Canada.

The virtual playground is increasing in size. Children email, text, tweet and post on Facebook. Some play games online. Others play games on portable consoles or hand-held devices.

Digital music devices are de rigueur for all ages, with certain products even targeting babies, like colourful felt dolls with MP3 ports and tiny speakers tucked inside, selling for around $50 (chloeinstyle.com).

Whether grown-ups are giving access to technology as a gift, or whether it’s the child who saves his or her allowance and gift money to buy the latest gadget, a debate rages on: How much is too much technology in a child’s life?

We asked psychologist Alain Breuleux, a professor in McGill University’s department of educational and counselling psychology. He spent 15 years studying how children use technology to learn, and how teachers use it to teach.

Q: How should parents deal with the pressure of deciding how much technology should be allowed in the home or given to their children?

A: The dilemma we face as adults, be it as teachers or parents, is deciding whether these technologies are relevant and what role they will play in our lives.

Q: In your opinion, are they relevant?

A: It’s important for kids to learn how to work with technology, because they are the generation that will grow up with these ever-evolving tools. That said, it’s the responsibility of the adults to be their mentors and coaches.

Q: Is it the technology itself that attracts children, or is it the influence of their peers that makes them want it?

A: The (tween) years are very important, formative years in social development. What’s important at that age is to develop a social network and a sense of belonging.

It becomes important to be competent in the way your peers are communicating. Twelve-year-olds especially like to have the gadgets, to be cool. It’s important to them to not be left out of the cool gang.

Q: Some parents perceive a child’s use of technology as a waste of good time. Is it a waste of time?

A: It is important for children to have access to these tools. There’s a lot of chit-chat, but at the same time, the child is developing a sense of social belonging and a competence with the technology.

Kids are becoming very competent playing in the digital playroom (instant messaging, texting, tweeting and posting on Facebook).

Q: How do parents control the use of the technology once children have their hands on the tools?

A: Parents should decide how much time is spent gaming or on the Internet the same way they decide how long a child is allowed to watch television.

Gaming is not inherently bad; it does provide opportunities for development — problem-solving is one example — but a child should not be left entirely alone in a gaming environment.

We don’t leave children playing alone in a playground without supervision. It’s the same thing with children who use the digital playground.

Q: Is there anything a parent can do to be more prepared to control the use of the technology?

A: It becomes more challenging to supervise a child if the parents do not use the same tools (texting, Facebook, etc.). We should guide kids to use the tools responsibly. But to do that well, it helps if we understand the lingo they use and the way they communicate.

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